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tv   Bloomberg Markets  Bloomberg  March 30, 2016 12:00pm-2:01pm EDT

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from bloomberg world headquarters in new york, good afternoon. here is what we are watching at this hour. stocks jumping around the world on yellen's signal that rates will stay lower for longer. .rasing losses for the year emerging market currencies headed for its best month in a most a decade. .il on a steady rise a small than expected increase in crude inventories. a tightening crude market -- what a tightening crude market could mean for investors. i sat down with tom ward to remember competing against the late check chesapeake ceo. more from my exclusive interview this hour. for more on today's activity let's head to the markets desk. julie hyman is looking at the leaders. we keep labeling it a huge risk on rallies. julie: it is not that huge.
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it is more that it is a resumption of the rally that we had seen originally when janet yellen gave her dovish message. dissuaded from that view by the fed speakers in the interim who were more hawkish. the double stone is back again and even as alex points out we are not that much up across the board we should point out we are off the highs of the session for the three major averages as well. the two day rally for the major averages is relatively substantial. it began yesterday after we heard janet yellen speaking it in front of the economic club of new york. what we have seen is a gain of 1.4%. on that basis, not anything to sort of ignore. it also means the s&p is once again higher on the year. it also means we have seen the market cap recovery of the u.s. $1 trillion since
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february 11. if you add on today's gain another $200 billion or so. that is the size of the rebound we have seen. the old leader coming back in favor. the sang stocks, whatever you want to call it now. .alking about facebook, amazon we are seeing a mixed trade. no forex is lower, facebook is lower read as a group we have seen substantial gains from these companies. on topon of this was chart yesterday where we have seen a rise for 15 straight sessions. whiteooks at the fangs in over the past 15 days versus the nasdaq in blue. you see the daily performance and the gains we have seen in the stocks. the stocks that had lagged for the year to date. had not been participating in the rally. if you look at your today performance of these companies
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you're seeing declines for all of them except facebook. they have not gained as much traction as the broader market. have not rebounded as much. if you look at the three-year performance of the stocks over the longer-term you have seen dramatic outperformance. underperformance recently has been recent. they have been doing so well over the past several years created there are some market strategists who say you need the stocks to perform well for the overall market to perform well. information technology adds a larger group is the most heavily weighted in the s&p 500 as well. alix: this was going to be the year of the value stocks yet again. thanks so much, julie hyman. let's get to first word news this afternoon. mark crumpton has that. mark: president obama is shortening the prison sentences of 61 people serving time for drug-related offenses.
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more than one third of the inmates were serving life sentences. most are nonviolent offenders although some were charged with firearms violations. to be released at the end of july. the united nations secretary general is making a global appeal on behalf of syrian refugees. ban ki-moon wants to resettle nearly 500,000 syrian refugees around the world over the next three years. he says countries could benefit from accepting refugees as they can bring new skills and experience to aging workforces. egypt is asking cyprus to extradite the man who hijacked in egypt air flight area a court ordered eight days of detention for the 59 euros suspect there he is charged with hijacking, illegal possession of explosives and threats to commit violence to read officials described the man as psychologically unstable. the united states has failed to qualify for the olympic men's soccer tournament for the first time in a half century. columbia defeated the u.s. to earn the final birth for the rio
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de janeiro games. four years ago the americans were even eight it by el salvador. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. .lix: thank you so much janet yellen's call for caution in raising interest rates is giving a boost to risk asset for a second day. all three major u.s. indices are up after yellen's dovish remarks at the economics club of new york. the dollar also off for a second day extending its worst month in more than five years. dollar guest says weakness may be more than allusion than anything else. netmail he is and greece strategists. he joins me now -- is an equity strategist. how much more downside you feel is left for the dollar? matt: it is going to be very interesting to see because we have the dxy index which is a
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basket of -- the dollar versus a basket of other currencies. it has been making a series of lower highs -- higher highs and lower lows but it is still within an 18 month range. it's going to have to break below 93 before we can really say the big rally we saw throughout the second half of 2014 and well into 2015 has come to an end. a lot of people are getting psyched up about this but we have to see it get more week or drop below that range we have been in for quite a few months before we can make that compelling argument. alix: looking at this chart that shows the range bound dollar through current times. even now we are in a smaller range of a bigger range. the other part of the story is the euro-dollar. the question being how much juice is left in a euro rally against the dollar when you do have the ecb coming in and buying more bonds on friday.
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matt: right. the whole thing is so interesting. we have had these test for several years from the crisis lows in 2009 through 2014 and late 2014. any of the global central banks made a big move, the markets had these big moves and lasted for a very long time. not seemed to have the same kind of impact whether on the market themselves or the economy overall. boj when it with the they started their qe program in 2014. the rallies mark -- the markets rallied initially. negativeh has been four the last eight quarters. the same with the ecb. you look at what -- they initiated a qe program and their
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stock market initially rallied but came back in. their economic growth, they just missed a recession in the last quarter, in the fourth quarter of last year. since their ad on the stock market has rallied the last few days but it is unchanged for that add-on first announced. alix: i like the distention between central-bank action and what we have seen and the country. we had this global risk rally with the exception of the nikkei which closed over 1%. how come the stock market cannot gain traction even though the government is set to be unleashing some kind of stimulus? matt: i think the problem has to do with too much debt. early on when these programs are first initiated, the levels of debt, credit markets shut down, very low levels of debt. this spur of growth and in the
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markets. the problem now is even with interest rates low we have debt that has grown and is higher than it was at the highs of 2007. we also see it in the u.s. for that matter. the biggest problem is too much of this debt has been added the things that do not provide any revenue to service that debt. we see that in china and in the u.s. with company buybacks in things. i think that is the same thing japan has had since the 1990's. we have a chart on the screen showing alix: eurozone debt as well as the u.s. and china. what is going to have to happen here in the u.s. for the s&p to break out of its range? if we don't break out of that range in the next few weeks, what does that say about the direction of the market? matt: i think my biggest concern
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actually the real biggest concern is if we start to see cracks in the credit markets again like we saw last summer and we saw at the very beginning of this year. those tended to be led by the energy market of course. if oil goes back down in a serious way that could create problems. the real problem -- that could create another spike down in the market. even if we don't have that, with so much debt in the world, it just makes it so difficult. it is like a wet blanket over growth. even with interest rates at low levels, corporate debt in the u.s. has doubled since 2008. alix: investors keep buying. they are into it. matt: they are but the market really has not done anything in the last 18 months. you see that in a global way. it seems that even though they are adding all of this liquidity
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markets have not done anything lately because debt has reached a level where the stimulus is not helping as much. it's helping to hold things up for things tog rocket through. i do want to compare us to japan from the 1990's but we could end up going sideways for longer than people think. we have been doing it for 18 months. alix: thanks very much. aley.m shares on pace for its best day in nine months. mistry stock revealed. we will reveal the stock and what is behind the move. ♪
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alix: you're watching bloomberg markets. it's time for the bloomberg business flash. a look at business stories in the news right now. shares of metlife are rising after a court ruled america possible biggest insurer is not too big to fail. a federal judge in washington removed the tag. the ruling undercuts the obama administration's plan to have more heavily regulated foreign bank businesses if believed to destabilize the financial system. in victory for general motors. award damages.to jurors did say the plaintiff proved her car was unreasonably dangerous. the trial was aimed at helping lawyers settle hundreds of similar lawsuits. las vegas fans have named the son-in-law of sheldon adelson as his chief financial officer. patrick dumond will fill the vacancy left open since july of
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2013 when kenneth k stepped down. dumont will be paid $1.2 million in base salary and eligible for a bonus of 100% of his pay. the markets desk julie hyman has a check on company movers. julie: the mistry stock revealed. it is lululemon doing very well. alix: i thought carnival. we will talk about that later. it is up indeed but not up 9.7%. julie: that is the surge we are in lululemon shares after fourth quarter profits beat analyst estimates. it has been trying to improve its supply chain. it has had supply chain challenges over the past several years. same-store sales up 11% for lululemon. better than the 8.5% estimated by analysts. this data was perhaps presaged
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by the first two weeks of march getting strong sales for overall retail and sporting goods retailers. showing some strength is returning to some of these sporting goods companies. those shares are rising. also, we are taking a look at what's going on with micron. those shares up by 2.2%. the chipmaker reports earnings after the close of trading in a does not appear to be a lot of optimism. it's interesting that the shares are rising today. there are several challenges for this country including following spot prices for memory chips. rising cloud demand is inconsistent. i'm looking at one of the charts that shows a couple different kinds of memory chip prices. you can see we have seen decreases over the past year for this pricing. we will see what kind of results
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micron shows and what effect it has on the stock given that rise today. halliburton. citigroup saying this is the most misunderstood of the oil service companies. investors are shying away because of deal risk associated with its acquisition of baker hughes and market recovery uncertainty. that scott gruber says the deal risk appears minimal and that the stock could rise 50% during a market recovery. alix: 50%. come on oil. -- presidentow at dilma rousseff defending herself in a speech right now saying in without a crime is a coup and she laments the climate of intolerance in brazil. she does say she respects the rights of brazilian people as well as democracy that says the brazilian presidents have to be chosen in elections and it is bad faith to say all in
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impeachment is correct. would unleashhat a flood of oil into the market in the next six months? we have the answer after the break. ♪
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alix: and looks like a nice day in new york but i think it is a little cold out. when oil what happens prices rally one of the biggest problems in the market is the inventory. you have an overwhelming glut of crude in the form of stockpiles. energy information agency reported inventories rose by 2.3 million barrels last week. the increase was less than expected but marks the eighth weekly gain for inventories. these inventories need to be worked off. joining me now from london is michael showing, and oil analyst at deutsche bank.
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u.s.,ng here first in the do you think we hit inventory tough? michael: i really don't. in ais point we are still range where inventory capacity is not a constraint for the u.s. according to my calculus and we are around 73% of capacity. could probably rise to 80% this year but i don't see that going toward 90 or indeed toward 100 at least this year. near i do not think that is a worry. alix: the other interesting thing that has happened in the past year has been the advent of floating storage. this cool function on the bloomberg. it is able to track all of the oil tankers that are at sea storing oil. this is the middle east gulf which is one of the biggest holders of this floating storage. michael, does this stay floating forever?
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michael: no. since the end of 2014 we have seen about three of cycles and two down cycles in floating storage inventories according to this measure. this global measure we do see arabian gulf inventories being a big driver of variability in that measure. since about 2014, and of 2014 we have seen it cycle between 80 and 180 million barrels. recently we think we probably hit a peak from here on out over the next couple of months based on over what kinds of period's the economics makes sense that we could get a drawdown of floating storage of about 40 million to 50 million barrels -- 30 million to 40 million barrels. alix: 30 million barrels of oil coming up to the market ready to be sold is what you are saying. michael: exactly. we don't expect them to come onto the market one or two weeks
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but probably trickled out over a period of months. it is incremental headwind for the market. think wti in comparison could be better supported. we have a lot of refinery capacity over the next month or so. for bread it doesn't seem this does bring on additional supply. day: a thousand barrels a -- 1000 barrels a day. we do have a chart that shows this inventory build. the idea is as oil prices are cheaper today and more expensive in the future you buy oil, you store it and sell it later and that has created this huge build in floating inventory. southeast asia country living to quite a bit. the other part is the relationship between floating storage and the oil price. we have a chart that shows that relationship.
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in the first half of 2015 and again in september we had seen floating storage build. at the same time we had seen support for flat price for brent over both of those periods. we had seen floating storage draw a lot and in the same time we saw rent price weakness. a lot of things going on. lots of moving parts but this is one element that we can say played along with the trend and probably helped push prices along in the direction of those trending kudos. -- those trending cycles. as a c floating storage falling over the next couple of months that could put pressure on brent. alix: the idea is that as you wind up having higher prices, you had inventory build.
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you wind up seeing the inventory come off that orange line. easy prices continue to fall and they bottom and they rally. sort of this continuous cycle that we see. what does this wind up doing to the oil price if we wind up seeing global storage come down? how much more downside we see? michael: i don't expect us to break new lows. we definitely are seeing rebalancing process underway for the global market. we see that as being halfway through in 2016. really need to get towards the later half of 2017 and in 2018 we think we could see some real deficit. since you see those balances gradually improving i don't think that means a major new down cycle for oil prices especially as we start to see the second year of reductions start to head non-us production. alix: do you think the market is factoring in this floating storage to be sold?
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michael: i have not heard it talked about whole lot which is why i wanted to highlight it. definitely putting pressure on prices. i cannot really say for sure how much of that has been factored it already. alix: thank you so much. michael hsueh. coming up, my exclusive interview with tom ward. he says he is regretting breaking away from the company he founded with the late are rhythmically and in. -- aubrey mcclendon. ♪
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alix: live from bloomberg wrote headquarters in new york, i'm alix steel. let's get to first word news. mark: thank you.
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republican presidential candidates are beating a hasty retreat from an earlier promise to support their party's eventual nominee. at a town hall hosted last night by cnn, donald trump said he does not feel beholden to a loyalty pledge because he says he has been mistreated. ted cruz and john kasich also refused to commit to backing the party's nominee. ministers and central bank governors will meet in washington dc next month. among topics on the table, global demand and growth. u.s. treasury secretary jack lew issued a warning on how the overuse of international sanctions can prevent growth, particularly here at home. >> we need to grow the global high. -- the global pie. monetary, fiscal and structural tools. around the world there are countries that have the space to use fiscal policy more aggressively including in europe. mark: you can see the entire
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interview with secretary lew on charlie rose tonight at 7:00, new york time here on bloomberg television. judge merrick garland, president obama's nominee for the supreme court, is meeting with two more senators today. both of them democrats including al franken of minnesota and kierstin gillibrand of new york. yesterday mark kirk of illinois became the first republican senator to meet with judge garland. gop leadership says it will not consider the judge's nomination during a election year. prosecution says they will not retry ron paul goya they are asking for a resentencing date. rejectedsupreme court the appeal and left intact his conviction on 13 corruption charges. he is serving a 14 year term. a new rating of car headlines modelsre than 30 midsize is only one great or good.
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the study says that of the rest about one third are rated acceptable. a third marginal and a third or. at the top of the list, the bottom, the, at the bmw 3 series. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. i'm mark crumpton. alix: you cannot mention oklahoma and natural gas without ginning a pioneer, tom ward. the former ceo is leading a privately owned capstone energy. in his relationship with the late aubrey mcclendon which is brought a great deal of attention. the two met when they were 23 and work together for 23 years at chesapeake for parting ways. mcclendon was indicted for conspiring with another company to release rigged bids.
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the other company was sandridge. mcclendon died leader o after -- after the suv was driving slammed into an overpass. i asked tom ward what he admired the most about mcclendon. tom: he was just a good friend. he was very smart. as everybody knows. most people that have ever been around him were energized by him. the same with me. i did not have the ability to do what i would say we were better together than we were separate. anyonei have never met in my career that could raise capital like aubrey could. alix: do you regret leaving chesapeake? tom: i love to chesapeake. i have had lots of regrets. it just came to a time in my life that i had to change how i
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was delegating time. the company was so big by 2006 that for me to operate in a way that i operated and operations as to where i knew what was going on with all the rigs and acquisitions. it became where i couldn't. alix:? what was your relationship like after you left tom: we were competitors. alix: what was that like going up with aubrey? tom: you don't. he was a very competitive person . is to picking to do places those types of competitors, not only chesapeake, but other large companies, whenever we are first getting started you cannot compete with that much capital. alix: did u.s. stay in touch throughout the years after you left and fairly way? tom: absolutely.
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alix: when was last time you spoke with him? some e-mail exchanges in february. last time i had dinner with him was in december. alix: the energy world was shocked to hear of his passing. his car hitting the embankment. what was your reaction? tom: i was sad. alix: there has been speculation about the state of his mind. what was he going through having been indicted the day earlier? in your experience, was he the kind of person who would be rash or would be taking the indictment to a new level and there are questions about suicide. tom: obviously i don't know the state of his mind at the time that he passed. i can't speculate on it. alix: when you talked to him in the past?, what was he like had he changed? tom: same guy i knew for the 33 years i knew him. alix: a lot has been written about him. crafty entrepreneurial.
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what was the biggest thing you learned from working with him? tom: he had a work ethic -- alix: so did you. i read you would sleep for three hours a night. tom: i was younger. he was driven. he worked exceptionally hard. alix: both of you get so much credit for really creating the shale boom. you are both extremely aggressive in getting acreage and such. did you feel like doing your time together what were the biggest mistakes that you guys made. madethe largest mistake we at chesapeake, we develop one of the best oil and gas field -- horizontal drilling in east texas. and tried tomodel move that into louisiana which at first was successful but ultimately was not.
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we had to revamp our company around natural gas which we did in 1998. alix: your biggest redoalix:? i would have bought acreage in louisiana. that was a mistake. alix: in the past you describe yourself as a contrarian avoiding lower shale plays. come a builder who runs really fast and analysts said you are the kind of guy who does not want 100,000 acres, you want one million acres. is this description true you right now. tom: not necessarily. i don't know that i would agree with much of that. i would like to take measured approaches. if there is 100,000 acres that is proven or that you have ,nough indication that can work that is a good acquisition. in -- as i look at and
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what we have done it capstone -- at tapstone, we do not take nearly as much risk as people think. alix: going back to aubrey mcclendon. said he was indicted he felt he was singled out as the only person in the oil and gas industry in more than 110 years to have been accused of a crime related to joint bidding on a leasehold. is that fair assessment? tom: i don't know the answer. i don't want to get into his legal issues. alix: to be sure but the inference from that statement leaf to be that aggressive bidding seems to be something that was part of the industry . is that true? tom: it can be. you look at any play from the eagle first, the stack, the school, all of these areas start and get more aggressive as
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things are proven up. you thatis it odd to just one person all of a sudden gets singled out? not necessarily that these practices were going on that that it is an aggressive industry so why now? why the doj would be interested in this. alix: that was my interview with tom ward. , iterms of the indictment had been dropped since mcclendon's's death. an investigation into lease bidding. at this point it is unrelated to that mcclendon indictment. separately bloomberg news is running that sand ridge the second company in the indictment that allegedly conspired with chesapeake to fix bid leases. tom ward is being personally sued by royalty companies. he declined to comment on any speculation or ongoing legal investigations. we will hear more from him and what he has to say about crisis,
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coming up at 2:30. he is always an optimist. a quick check on u.s. stocks. the risk rally is still underway. it appears we would be off our highs of the session as janet yellen yesterday continued the idea of lower rates for longer. the s&p up by eight points. the dollar continuing its decline as well as oil trading flight -- flat to slightly higher. abigail doolittle is looking at some of the tech movers. abigail: one reason the nasdaq is trading higher is apple, the biggest boost to the index with shares trading higher. the firm has upgraded the stock to outperform. iphone estimates appear to have bottomed. catalyst-over-year a for the stock could be launch of the iphone seven later this year. outer he downgraded shares near the top saying iphone estimates
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were too high. that proved true. now he is upgrading it. alix: netflix not really participating in this rally today. abigail: there is no real reason , no fundamental news that could be driving this. one of the biggest drags on the nasdaq today. what could be going on late yesterday the federal communications commission said that it appears they should take into or examine netflix's filings with the regulator for potential violations of rules against misrepresentation, something most investors do not want to hear. mecca drag on shares today. the stock has been very volatile. recently put in a bearish death cross. the could be some sideways volatility ahead for netflix. alix: that is a death cross chart. a depth cross chart.
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world'sp, one of the largest makers of steel is considering selling its u.k. unit due to a slump in global prices. we will examine corruption. fifa and the impact it is having on the world cup straight ahead. ♪
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alix: this is your global business report. slumping global prices. the move make may accelerate the demise of britain's steel industry. and reduced $3.5 billion price tag.
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years of pursued by foxconn which began its bidding process in 2012. the estimate tops one analyst expectation of about $7 billion. we begin in -- we will begin in the u.k. were one of the world's largest steelmakers is considering the sale of its british division because of weaker demand and slumping global prices. the potential move comes as -- tata steel group executive spoke to bloomberg about, sounding off on the difficult business environment. >> in the global steel industry given the oil capacity issue given how the trade mentor happening across borders, there is a kind of essential crisis. there are countries with open borders which are more vulnerable to some of the risk. alix: a deal that brings
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together the main assembler of iphones with the maker of japan's first television sets. foxconn has written negotiated a price of -- sharp has been chortling with losses. foxconn has pursued the company since 2012. ata estimates the auto industry's biggest recall ever may cost more than $24 billion. almost six times more than the total assets on its balance sheet as of 2015. the estimated total in recall involves 288 million airbag inflator's. >> time for a bloomberg quick take. no sport event is more popular than the world cup. in 2014 more than 3.2 billion people tuned into the
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competition. countries by for the rest these of -- of the prestige of hosting. situation. in 2015, fifa, which oversees latterglobally, band set -- band sepp blatter. an investigation into what the doj calls rape and corruption in the sport involving hundreds of millions of dollars in bribes. world cup hosts are chosen by the two dozen members of fifa's executive committee in a secret vote and that is where the trouble arises. while canada, colombia, and mexico are bidding to host the tournament, the u.s. does not bid unless the process becomes more transparent. fifa says it pushed the tournament into new lands to give countries a chance to showcase their cultures. tricks highlight the
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critics question whether appropriate reforms can be carried out by fifa officials who have been part of the system . fifa never release findings of its inquiry into cutter's bid and the man who led the probe wit in protest. sponsors will be watching closely. they put pressure on fifa to remove blatter. my fifa needs for its mounting legal bills. alix: this is your global business report. for more stories visit bloomberg.com. up next is the fed fueling a junk bond bubble in the energy market. we will discuss the rally in the risk, next. ♪
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alix: this is bloomberg markets. it is time for the bloomberg is the splash. -- bloomberg business flash. a partial victory for carl icahn who has been battling aig over executive pay. the insurer has abandoned the use of credit default swap spreads. created theued that wrong kind of incentive. he wanted aig to focus on returns on equity. the company says long-term incentives will probably be based on shareholder return relative to years. forheed martin has an order $480 million. deliveries to straight line aviation will begin in 2018 and span about two years. the u.k. company says it is talking with users including alaskan oil field.
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street corps is buying ge asset management for $485 million. the sale is expected to close in the third quarter. flashs your business update. a risk on rallies. what does that mean for credit? u.s. junk energy debt has seen a record 16% rally this month. joining us for the week's debt check is lisa abramowicz. my estion after yesterday was is this going to make investors want to buy high-yield more than 48 hours ago? lisa: it would have had to change the dynamic we have seen play out this year which is high-yield ions in the u.s. have been incredibly tightly correlated with oil prices. more than anything else seemingly. if you look at the biggest hig-yield etf, black rock
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and compare that to include values -- alix: let's do that. using the function on the bloomberg year. this is the correlation between the two. as you get more toward zero the more positive one-to-one relation it is. around .6 right now. lisa: the higher it gets the more correlated it is. one-to-one movement it will be. this shows a real move in tandem which raises a question of how much can central-bank policies really boost this market given that so much hinges on the oil market? you know as well as anyone else it has been incredibly fickle. our clays was saying the commodities rally including an oil does not have fundamental legs to sustain it over longer-term. alix: that is not make a lot of sense because energy in the
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high-yield market is significantly small percentage. it has been coming down. lisa: it had been as much as 15% but it has come down a lot. the market value has gone down of the debt. one thing people say, when investors were buying high-yield bonds in energy companies were not necessarily overweight energy. the reason they were buying was because energy companies were selling so much of the debt and investors were following indexes that reward companies according to how much debt they have outstanding rather than the creditworthiness. a lot of investors were becoming more overweight energy. they even perhaps understood by virtue of following the index investors are forced to take a view on energy which is difficult to do and if they don't want to get into that quagmire they have had to sell. because they had to sell no one has been wanting to buy. you see a huge decline. because there was some buying in not a lot of liquidity you saw a
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massive rally. it already started to fade. even yesterday, quite considerably based in oil prices without the fed influence at all. you could see the prices are coming down. we had thatea is rally and now it is trailing at $.83, $.82 on the dollar. so if you have credit traders having to become energy traders and vice versa, how do you short? lisa: last year a lot of investors wanted to short jump bonds and they got it right positioning wise. they got it wrong because they went to credit default swaps, and index of credit default swaps that did not have as big of a weight toward energy bonds. they did not capitalize on the downside as much as they would have considering they were
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actually right. because of that market has responded by doing the biggest change ever to this most common index of credit default swaps and high-yield companies and having incorporated more high-yield debt, the reference companies underlying this index. there is a higher waiting to them even the underlying indexes. is the correlation for high-yield bond markets. alix: so now you can do it. lisa, thanks so much. to more fast commentary go ga df on the bloomberg. michael hansen will be talking about the fed coming up in the next hour. ♪
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york, 6's 1 p.m. in new p.m. in london welcome to bloomberg markets.
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from bloomberg wealth held court is in your, good afternoon. here's what we're watching -- stocks pulled back from their highs but the yellen fueled her statement was welcomed. the brazilian political prices thee to blowing over and president could face impeachment months before the summer olympics begin. is canadian prime minister working on the budget but his finance minister says the books will be balanced in five years. for more, let's go to the markets desk. that: we have this rally is intact but we are giving up some of the gains right now.
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this is in the wake of janet comments yesterday that reinforce the perception that she is still dovish and talked about caution in terms of raising interest rates. all the major averages are holding onto slight gains. strongly --re up 30 i stand corrected, they have are strong but now they flat. we saw oil reach its high but now obviously it has come back down again. one of the things underpinning the market as energy stocks rose. we see a little bit of reversal and we have been watching the u.s. dollar which had been supporting oil prices as its week and remains weak versus the euro and the pound and falling versus the japanese yen, linked to the yellen commentary.
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it's interesting the dollar remains weak. as we have watched this go on, we have not seen that relationship holds true as it was earlier in the session. techgh all of this, alix: remains a leader? julie: yes and financials are joining tech for the hot spot. let's take a look at the bloomberg for the imap. consumer staples are also higher. financials and tech have been showing the most string today contributing not insignificantly to the gains in technology. apple shares are higher and it was upgrade to outperform. the analyst at cowan said a couple of things are driving this. apple could upgrade and adopt this new type of led screen
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2017. organic led for the market anticipated this happening in 2018. apple is trading as a -- at a discount to its large tech peers. the shares are up a little more than 1%. apple has already performed very well this month so far. this is the heat map. this month, apple shares are up 12.5%. you have to go back to july, 2013 when they had a 14% gain to see the same kind of performance. alix: really? thank you. let's get to the first word news. obama issident commuting the prison sentences of 61 people serving time for drug-related offenses. of the inmates
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were serving life terms and most are nonviolent offenders but some are also charged with firearm violations. the endl be released at of july. to minneapolis police officers will not be charged in the fatal shooting of a black man last november. one of the officers is white and the other officer's race is not been released and the 24-year-old jamar clark was reaching for and officers gun when he was shot at protesters say he was handcuffed. it led to protests. virginia governor terry mcauliffe is vetoing registered -- legislation aimed at opponents of same-sex marriage. it would legalize discrimination and hurt the state economy and the measure would stop the state from punishing religious groups who services related to gay marriages. republican supporters say it would protect those expressing their religious believes. less bowsek island of refugees protested at a
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detention camp. it holds people who could be returned to turkey under the terms of a new agreement. refugees are unhappy they have been held for 10 days without eating told what will happen to them. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. alix: thank you so much. janet yellen defended her policy approach yesterday highlighting the symbiotic relationship between the central bank and financial markets. participantsmarket appear to recognize the fomc's data dependent approach because incoming data surprises typically induced changes in market expect haitians about the likely future path of policy resulting it movements in bond yields that buffer the economy shocks. this mechanism serves as an important automatic stabilizer
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for the economy. hansen joins me now. because itout to me seems like she is not ignoring the markets anymore but specifically targeting the markets. a i think targeting might the little more than what the fed thinks they are doing. they clearly have to acknowledge that when the data is soft and the market results -- the market thinks the fed will react to that, it's hard for the fed not to do so. it's a catch-22. monetary policy works through an expectations channel. that's what she was trying to highlight. alix: if you take a look at the five year real rate and you take a look at what happened from march 15 through yesterday, you , one at theips down
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fed meeting and then her speech. does that translate into a de facto rate cut? >> in some sense, the hybrid with the very addition does not have as much of an impact on the economy as does the underlying trend. i think there is a question in about where the fed stands in terms of how many rate hikes. interpretation is the market has been skeptical of the fed for some time and sees admission as to rate hikes as a way lay on the road to zero. if i listen to other fed officials, i'm not sure that the right interpretation. alix: what is the right one? >> i think the fed is on track to hike in june of data continues this way. i think she did a good job of taking april out of the discussion. we had the chicago fed resident this morning say he thought april was unlikely. a few fed officials last week
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raise that issue. she did a good job of trying to corral the discussion away from april. muchnk june is still very alive given that committee want to be gradual and they are thinking about doing to rate hikes. you have nine of the 17 fomc purse at the balance -- participants giving dots. alix: on the flipside, if you look at the work function, there is only a 24% chance of a rate hike as the market sees that in june and only 34% in july. we continually see the fed re-raise their expectations to the market. why are you holding onto that to rate hikes? >> the fed went from 4-2 and then the market went from 1/2 to a 1/4. given that the inflation data is been better, janet yellen
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uncertain and the employment rate comes down, unless there is orlly big global shock something that fundamentally changes the path for inflation and unemployment, i think one or two more rate hikes this year is not that they give a move and very much in line with what they have been saying. alix: you mentioned and employment but also hinges on inflation. how much is she willing to tolerate? >> that's a great question. it's not obvious. she has said several times that that is not tried to overshoot. -- that the fed is not trying to overshoot. tenths above 2% is not add that above that, the fed is more concerned about letting that persist for very long. caused thewhat overshoot like a spike in food or energy prices. alix: friday's jobs day in the rhetoric seems to be good news for jobs and it doesn't matter
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because the fed will say they did their job right. >> there is some of that. the fed is looking for the unemployment rate to come down a little further overtime. it could come down faster than they think and that could potentially force them to go more quickly. broadly speaking, the challenge for the fed is that the labor market is very good in the inflation numbers are better but they are not art and but the underlying growth numbers are not so hot and that is still a challenge for the fed. alix: thank you very much. lots more coming up. we will be right back. ♪
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is givingelegant wti
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up its gains and it was up over 4%. it had its best a in two weeks before falling to relatively flat. part of the selloff is due to a rally in the dollar. it had its worst loss of the day in oil is now down for a fifth straight day, the worst streak since 2016 on february 11. most analysts are calling for another decline the oil price. for 20-20 5%ooking saying the current rally was not fundamental. time for our metals bulletin. julie hyman has more. steel, the from tata indian steel giant. says a slump in global steel prices has forced it to consider selling its u.k. steel business which would hasten the demise of britain's already dying steel industry. the company said global oversupply in high manufacturing costs and rising exports mean trading conditions in the u.k. in europe have rapidly
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deteriorated and the company will consider all options for portfolio restructuring. the workers are trying to pressure the government to support the business. some are talking about taking it under temporary control. 7%a shares arising by nearly in indian trading and we are seeing the steelmakers higher in the u.s.. . global steelmakers are routing. the company last year closed plants and cut jobs in the u.k.. the main reason is chinese exports accounted for about half of global output. they surged to an all-time high last year. tata steel has decided to put its u.k. business up for sale. with the executive director and we asked him about
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the direction being vital to the company's future. >> over the next weeks and , we will bemonths in this operating phase. >> what about southeast asia? >> it has been in a restructuring phase making significant restructuring in china. they are currently doing the same as far as singapore is concerned. a lot ofy to say that the positive results of restructuring is being shown and coming to fruition. going forward, given the fact where chinese steel capacity has the influence in the southeast asian market is probably the closest. we will obviously have to be very lean and competitive and keep doing the right things from a product point of view. >> the margin pressure on account of the dumping, will you
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feel that even more? >> in southeast asia? >> yes. >> the benefits of the restructuring are coming out. it is very close to china so it's the first port of export. we will have to maintain a very lean structure from a cost competitive perspective and continuously do value addition to the product mix. we will have to introduce new products and that is the kind of inherent trend that business has especially out of singapore. it's much more downstream in the import profile that comes from china. talk about your domestic obligations in the iron ore procuring. what is happening there? operating andre we are deeply focused on minesion of our carbonite
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which will apply eventually to drilling another. from an iron ore perspective, that's where we are. we have been infusing production and have achieved significant amounts of improvement. the iron ore and coal situation continues. with what you have seen on excess supply, it's not different for still manufacturers but will the government intervene? did that help? will you pass it on or take on another price hike? >> i think it was the government stand is alcome because it has build defense mechanism as a country, not as an individual operator. forink that is important not only the competitiveness but
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also the robustness of the steel sector. i think it is important to mention that competition by itself is always welcome. still ahead, apple is not the only tech company being ordered to unlock phones. reports say the fbi is also approaching google and we will have that story when we come back. ♪
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alix: you are watching bloomberg markets. week.s. said earlier this
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that it gained access to the data on iphone used by terrorists and no longer need apple's assistance. it marks in and to a significant legal clash. reports say google has been asked by the fbi to unlock phones. coryl turn it over to johnson and carol massar. cory: thank you for joining us on bloomberg radio. we are joined by chris mclean looking at the issues of cyber security and specifically the apple issue. the company has been identified as the way that the fbi got into this phone, celebrate, an israeli company. how does this device work and is it a device and not just software? >> i don't think we will find out for a while. get at is that they can it and the fbi got into the phone and there is a methodology that this company was able to use and we won't know what that is. the most important secret here
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for them is can they reuse it? do they have it in their companyon or does this make money off it in other ways? cory: can't they continue to use celebrate? if the fbi made the deal but celebrate can make this money and other ways like sell it to apple or other governments. i don't know would deal a have with the fbi. rite the onlyeb company that could have done this or could there have been others question >> we want no. all hands on deck and there were all kinds of governments and companies and underground hacker groups and the white hat hacker groups that wanted to find a way into this phone. the all hands posed went around the world and this is the first company that says they can do it but it does not mean they are the only one. cory: a lot of this is what the
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exploit needs to just means to apple. what advantage with a have knowing how to hack into an old they need to determine if this is a one time thing or something that represents a more fundamental flaw in their ios. they have to be in an arms race to figure out if it's something need to fix or is it something that they can claim has been fixed by the security patches. carol: this is beyond apple versus the government. you don't believe this discussion is being put to bed so where do we go for now? makersakers are polici or regulators need to step in question mark >> i think techbody on all sides, vendors, legislators on both sides of the isle, they have been calling for a commission. my guess is a commission will happen it will take a year or so to figure out what this means
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and what to do going forward. i think the consumers have the power in the meantime to push the issue more. they should be the ones asking what is apple doing and the other tech vendors doing and what are my health care provider and other companies i give dated two, what are they doing with my agent and shall i allow that? legislators will have a fight over the next year by think the consumers have a bigger and faster play to force the issue. cory: there is irony in the fact if there is a federal law that anyone who discovers an exploit has to turn it over to the company. it suggests there has been a long conversation with best practices and the government is trying to be on both sides of that. legitimate.and it's on one side, they want to protect the nation. this is about national security may have a legitimate fight and that's the argument. they also have an obligation to help fight against people that would take over data and to protect consumers. it's a hard conversation.
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it possible that the fbi has a legal duty to protect companies and american citizens from the fbi? >> this is why it should not be part of an investigation. it should not be a judicial conversation, it should be legislation. we need a smarter conversation about corporate ethics and privacy. when need to define what privacy is. it should not be about judicial reviews. carol: in terms of policy or what could it mean for innovation? >> the other thing that's happening is look at the u.s. policies in the past like the edward snowden revelation about prism. that cost the u.s. economy around tens of billions of dollars. if we get this wrong, does not just hurt consumers. cory: the revelation of the
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prism program? that cost the u.s. economy 10 billion >> dollars question mark >> yes some companies decided they did not want to do business with the u.s. because they did not know what the u.s. policy was. cory: thank you very much. alix: thank you very much. up, the brazilian president is on the brink and we will bring you the latest on the ongoing impeachment saga. ♪
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x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. worldfrom bloomberg headquarters in new york, this is bloomberg markets. fbi use the help of
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to access datate in the iphone used in the san bernadino shootings. the fbi was already a client before the controversial project. is a unit of japan's some companies and that company shares are up 40% since it was set a third-party got into the device. the united nations secretary-general is making a global appeal on the behalf of syrian refugees. he wants to resell nearly half a million syrian refugees around the world over the next three years. he says countries can benefit from accepting refugees because they can bring new skills and experience to aging workforces. the fda has approved an experimental blood test to screen for the zika virus which means u.s. territories with active infections primarily puerto rico would be able to
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resume collecting and screening their own blood. the fda says the test from the drug company could be expanded if the virus spreads to other areas of the u.s.. $86 million drug surveillance plan to fly missions in afghanistan has never taken flight. it has been sitting in delaware for seven years. that's according to an audit released today by investigators from the justice department. they say it has been plagued by missteps costing four times the initial estimate. the u.s. squad has failed to qualify for consecutive olympic men's soccer tournament for the first time in half a century. columbia defeated the united states 2-1 to earn the final berth for the rio games. four years ago, the in americans were eliminated by el salvador. i'd takews 24 hours him powered by her 2400 journalists in more than 150 news bureaus around the world. alix: thank you so much. the brazilian president is
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having a tough month. hittingr popularity is rock bottom before a planned impeachment vote, speaking today in the capital, she repeated the phrase that impeachment without a crime is a coup. what's the worst case scenario? of thed richard haas council of foreign relations. drage worst scenario is to it out longer. unlike argentina will where you an election, the bad scenario here is you have a continuing shrinking economy against the backdrop of a prolonged impeachment process and if there is a change was all of us would like to see, it's not neat and clean and there are still questions of legitimacy and whether the new government can work. it's 2.5 years before the next election. region'srrisome is the most important economy is in a prolonged crisis. vonnie: money has been pouring
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in, why is that? when this is sorted out, will it be better? >> as soon as things broke against lula, the stock market broke. brazil has a lot of strength but, that, but. it could be a long when. and in yourat this world, you never know what you will see. if you said five-year's ago that the president will visit cuba and argentina and brazil is flat on its back, no one would have predicted that. thatcouple of years ago is the brazilian future had arrived and look where we are now. you have 4% shrinkage last year and estimated the same this year. it is also a real drag in argentina. it has consequences for itself and the entire region. vonnie: are we talking about corruption or economic incompetence? reports, itthe news
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seems she is not the right person matter what the allegations are to make this economy grow, is that fair? >> yes and yes. you've got corruption which is driving the politics but you had the re-bloating of the public sector. brazil was on the right course and under the president, you had corruption but going back to the future. publicke let's grow the sector and have the government play a large role and over regulate and pour money into this or that project and this is the result. brazil did this to itself. the good news is that it did it to itself and it can undo it. there is no reason it has to be in this mess. alix: that was the president of the council on foreign relations. juliag us for more is from sao paulo. let's get into what happened over the last 24 hours. you had the second ruling party, pmdb abandoning the roussef
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government. does that mean impeachment is a definite? it's still not a definite but it did become much more of a possibility. that was the largest party in brazil and they have important positions in the government. the fact that they formally abandoned roussef, it makes it more likely she will be impeached. alix: her vice president is part party so then he takes over if she is impeached. was this a legitimate defection or a political maneuvering? >> it depends which side you ask. pmdb has said this is legitimate and they are making this decision because there is no dialogue with his government and there is no moving forward. they have been saying this is a coup and there is no grounds for impeachment and we will not be removed from power under these circumstances. the next shoe to drop will
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come from other ruling parties and if they choose to abandon the president, it seems impossible she would be able to stop impeachment for going through the house. >> right, she is trying and the government is trying to get other parties to get on its side. so it has an of votes to stop impeachment in the lower house and stop it from getting to the senate. they are offering pmdb spots in the government now that they are no longer in the coalition. the government is trying to bargain and see what they can offer to get these people on their side. between nowappens and mid-april when the house has to vote? the impeachment committee in the lower house is already started analyzing the case. rousseff has a few more days to present her case and they will decide then -- they will put it to a vote which should take
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three days according to the lower house president. then they will decide if they want to move forward with impeachment. that is expected to be around mid april and then we'll go to the senate and the senate will decide whether it accepts or not. alix: i was reading that the time between the house and the senate vote could be months. what happens to her in that time? thet could take months and defendant has to form its own committee. this could be a very drawnout process. we don't know. if the senate accepts the accusations, she is temporarily removed from office but not impeached yet. this could take much longer than we are expecting. alix: she has been so forceful that she will not resign. she is calling it a coup as you mentioned. under what circumstances could she be forced to resign? forcefuls been very
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saying she will not resign under any circumstances. it's hard to know. it could be another development. yet and itaccused could be something related but we don't know. what will be her strongest argument in her case? >> i'm sorry. will be her strongest argument when she argues against impeachment to the house? >> her strongest argument is there is no legitimacy to the impeachment process and it's completely political. they are trying to remove her because she is unpopular and the parties are fighting. that is her statement. the impeachment process is aced on her accounting maneuvers that she did in 2014 to get the budget in line.
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this is not a reason to impeach a president. no matter who winds up leaving the country in the next six thats, is there any hope real change can be made fiscally for brazil? it's very hard to imagine in this government because they have not been voting on much. if you look at the budget numbers, there is not much getting done and things are not improving. it's hard to imagine they will get together and vote any sort of fiscal reform or anything that would then if it does government and push the economic agenda forward. alix: great stuff, you cannot believe these headlines as they come out day today. thank you very much. up, canada is busting its budget to stimulate growth. the finance minister says it's only temporary so how will he balance the books? our exclusive interview is next. ♪
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alix: this is bloomberg markets. it's time for the bloomberg business flash with a look at some of the biggest business stories in the news. lockheed martin has one order for as many as 12 airships for $480 million. delivery will begin in 2018 and span about two years. the u.k. companies of the talking with potential users including alaskan oilfields that have struggled to secure backing for new ice highways. a victory for general motors in new york after a jury refused to award damages in a case involving a faulty g.m. ignition switch. the plaintiff proved prove her
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car was unreasonably dangerous and the trial is aimed at helping lawyers settle hundreds of similar lawsuits. gm has recalled more than 30 million vehicles. selloff of itsc financial division continues. the sale is expected to close in the third quarter. that is your business news flash up a. let's go over to the markets desk. we are still reporting earnings today. julie: we are but then we roll into the next reporting season. you mentioned carnival earlier as one of the gainers. it is up 4% after the company came out with earnings that he estimates and a forecast that was ahead of estimates. the company said cumulative advance bookings for the rest of the year are well ahead of the prior year at slightly higher prices. that's driving gains in that stock and cruise line operators generally. restoration hardware is another
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one we are watching and this is unusual. the shares are up 4%, off the highs of the session, but still higher. the company earnings are coming in below estimates and its forecast is becoming likely below estimates but it says revenue for the year will be up in the low to mid single digit range. the stock is down about 50% year to date and it is relatively short at 20% of the shares sold short. that could begin treating to the gains we are seeing today. sonic company is out with earnings that he'd estimates. comparable sales are up 6.5% in terms of overall comparable sales, 1.6%. same-store sales for the year which is up over its prior forecast and that's fueling a gain of more than 5%. estimates is out with that each and the same-store sales are up 11% so the shares are gaining by quite a bit.
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if you look at consumer discretionary as a whole, expectations are that earnings per share will rise 10% during this earnings season. and yet the stocks are heavily shorted. alix: it's fascinating. julie: there are not a lot of opportunities for the continued church directory of consumer spending. alix: it also shows you the mindset of investors. thank you so much. turning to the canadian economic blueprints -- consumer confidence is running high in canada this week after the countries knew finance chief delivered his budget. what is the outlook for growth? earlier today, erik schatzker spoke exclusively with the honorable bill mareau. >> we are focused on growth. we're focused on growth that will help canadians. clearly, our agenda is to help middle-class canadians succeed
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after a challenging era. we want to help them in the next generation so we made a commitment to growing the economy. it's something we know will make a difference for the next generation and for investors, we know they want to see an economy that will grow at a healthy pace over the long-term. that's exactly what we are setting out to do. erik: we are talking about canada who taught the rest of the world how to run balanced budgets and they were rewarded by restoring their aaa credit rating. what if moody's doesn't agree question mark >> i think they will because what we have said we will do is be prudent along the way. we are blessed in canada with a particularly good situation. we have been able to make decisions over time that have lowered our net debt to gdp. among the g7 countries, canada to gdp towest net
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make investments to grow the economy. canadians told us they wanted us to invest to grow the economy and ge imf and the oecd 20 countries are recognizing that in an year of low growth and an area of demographic change, what we should be doing is making investments, using fiscal measures in order to grow the economy. we are getting canadians on board. we're getting international observers on board. i am confident that investors in canadian bonds are going to be supportive because we will enhance the long-term trajectory of our country. 4.5 alien budget has dollars in new child subsidies and introduces means testing. is income redistribution the only way to really, truly address the inequality problem? >> from our point of view, we look back over the last generation and realize that middle-class canadians have not been as successful as they might
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have hoped based on the growth in our economy. that's a fact we want to deal with. we believe that finding ways to enhance their ability to spend in their family will not only help them which is important but also help our economy. someone who was a middle income canadian getting 2300 dollars more in child benefits, they will put that money back in the economy. good for them, good for the economy and over time, that will help our growth. we think it's about helping people and helping the next generation by having a more productive and more successful economy. with howyou agree inequality should be done? >> philosophically, we agree that having a country that enables all people to be successful is important. if we have a country where the middle class is not able to grow their incomes, that is not ok. we are able to grow our economy
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money to make sure it's inclusive and that's what we're working towards. erik: one conspicuous absence in the budget is money for bomb ardier. >> and our budget, we took a look at how we can deal with the economy broadly. setting lutes thinking about our innovation agenda. we will spend more time on that this year. in the case of the aerospace sector, it's critically important to us. we have been successful. bardier has been successful and their new c-series, it's a great jet. we are doing due diligence on a request that they have put forward around government coming along with them. we have not finished the due diligence yet. alix: that was the close of interview with the canadian finance minister. coming up, when janet yellen speaks, the market listens and
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we will look at what economists -- at how economists or interpretation foomc language.
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increases may be on the horizon according to chicago fed president. it was the more curious sounding -- cautious sounding janet yellen that drove markets up around the world. michelle meyer helped us decode fomc communication. thatat we have learned is they are not convinced that they should start now. beat in the fomc meeting and yellen's comments, then not sure if it's temporary and they are still concerned about the dollar potentially weakening inflation.
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they have not seen wage inflation pickup which means we don't have that posters prices from wages. in that respect, given the uncertainty, it means they will allow inflation potentially to increase a bit more before they become at all concerned that they start to see higher inflation. we have to remember that 2% as a target is not a ceiling. it's an average. what the actual timeframe? day, the end of the central bank objective is to smooth the business cycle. you want to create an environment where your recession is not 2-d but your economy does not run too hot and inflation is not problem attic it the timeframe is not clear. does the fed lose some kind of credibility? they talk about a possible rate hike and janet yellen says no. >> their communication has been
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difficult for a number of reasons. one of them is because they are learning as they go. what the fed has realized and janet yellen has come to realize is that talk goes a long way. early last year when they began policy, the market priced in rate hikes and a tightening of financial conditions. and you policy mistake saw these moves in the market. earlier this year, for whatever reason, distress in the markets they got the fed worried. given that there is not a clear picture as to what the markets will look like and how that feeds back into the economy, they will err on the side of being cautious. alix: what is your outlook for the u.s. economy this year? we are not that different from the fed for this year. we are looking for low 2% growth. for the first quarter, maybe 1%.
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on the gdp front, the data has come in pretty soft. for inflation, we are a bit stronger than what the fed has. we were surprised the fed did not revise up inflation for next data look the recent stronger and the dollar has started to weaken. thatink the likelihood is we will have a stronger core inflation forecast but not enough that will fundamentally change the equation for the fed. ttracy joins me now. >> we have seen off the back of the dovish speech yesterday, things like junk bonds continue to rally and spreads and credit are compressing. all these sorts of yield plays that were popular over the past couple of years and then had the air kicked out of their tires in recent months are all coming back. leveraged loans, mpl's, canadian
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junk that. -- debt. alix: we will talk about credit and the run into trash. trash.dash to to thee will all so talk head of a killer hedge fund. it all fell apart with the funding of a gulfstream five jet and has been cleared of wrongdoing by the sec will talk about his comeback fund and get his perspective on today's hedge fund industry and the wider credit market. all this is coming up at 4:40 p.m. eastern. williamp next hour, thornberry shares his tho thoughts on the presidential race. ♪
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david: it is 2:00 p.m. in new york, 7:00 p.m. in london and 2:00 a.m. in hong kong. carol: welcome to "bloomberg markets."
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lisa: good afternoon. what we areis watching this hour. the global stock market rally marching on. the dow and s&p 500 extending their 2016 highs and day after fed chair jenny ellen sent stocks higher. sentd chair janet yellen stocks higher. lisa:'tis the season of job cuts as big banks around the world all ax positions. where will traders turn next? david: u.s. military's fight against ne islamic state. us.thornberry joins let's head to the markets desk were julie hyman has the latest. julie: this janet yellen induced ly

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